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Market Overview

Rajasthan is awaiting the arrival of the monsoon. The Indian meteorological department has predicted above average rainfall during this monsoon season. However, India has experienced 25% below average rainfall for mid-June.

 

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All of the previous year’s harvest has now gone into stock, with speculators, manufacturers, and stockists. This has allowed the farmers to liquidate their Guar which reduces a downward pressure on prices. This year, farmers are expected to sow 20-30% fewer guar crops in favour of more profitable alternatives. However, farmers still sow Guar, as the crop adds nitrogen to the soil and the waste product has an extremely high protein content, which is sold as cattle feed.

 

jpeg-31Demand

Demand from the food and technical industry has remained stable, as current prices are at affordable levels. We have noticed a rise in demand from the oil drilling and hydraulic fracturing industry. This is the result of the prices of brent crude increasing to above $45. Since January this year the prices of crude oil have continued to increase, if this trend continues, we anticipate the demand for Guar Gum from these two industries to rise.

 

Outlook

The price for Guar Gum is predicted to remain range bound or increase. New Guar crops will start to be sown after the first round of rains, which are due in the Guar growing regions in the next 5-7 days (according to the IMD). More accurate figures will then be released regarding the quantity of Guar crops and whether it will be sufficient to meet the projected demand.

 

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